Oil Trade Postmortem

What follows is a postmortem of the trade described in: Oil: Why the Short-Term Trade Points Higher.

The original piece was published on Friday, February 27 — the same afternoon I entered a position long in UCO.

A bit of context on the timing: I had been watching oil for roughly two weeks, weighing the setup against the structural bear case laid out in the original article. The original thesis was straightforward: with U.S.-Iran tensions visibly escalating and talks deteriorating, the conditions were in place for a geopolitical spike not unlike the one in June 2025 when the U.S. bombed Iranian nuclear facilities — a sharp, short-lived move that rewarded those who were positioned ahead of it and sold into the pop. Thursday night and into early Friday morning before my regular work day I was able to solidify my thesis and enter the trade and none too soon.

The U.S. and Israeli strikes on Iran breaking within hours of the buy. Whereas the conviction that something was imminent was real, knowing it would happen that specific night (as opposed to several days or even a couple of weeks later) was pure luck.

Initiating Events: Friday, Feb. 27 Through Sunday Night, March 1

Sat. Feb. 28, 12:15 AM CST — Operation Epic Fury launched. Coordinated U.S. and Israeli strikes hit Iranian military targets, nuclear sites, and senior leadership. The Supreme Leader was killed. Trump confirmed the operation in a video statement shortly after.

The original plan at this point was simple: futures would spike Sunday evening, and the position would be evaluated for a quick exit at or near Monday's open.

What changed that calculus was how the weekend developed.

Sat. Feb. 28 — GPS jamming began immediately across the Middle East Gulf, affecting over 1,100 ships within 24 hours, falsely placing vessels at airports and inland locations across Iran, Oman, and the UAE. Iranian VHF radio transmissions began warning vessels that "no ship is allowed to pass the Strait of Hormuz."

Sun. March 1 — Three vessel strikes were reported by UKMTO. The MKD Vyom was struck north of Muscat with one crew member killed. The Hercules Star and Skylight were also hit, with fires aboard and crews evacuated. Iran was not issuing warnings — it was acting on them.

Sun. March 1, 10:02 PM CST — Maersk formally suspended all vessel crossings through the Strait of Hormuz until further notice. Hapag-Lloyd, MSC, and CMA CGM followed overnight.

By Sunday's open of the futures markets, crude spiked sharply — pointing to a significantly higher open for UCO on Monday morning. The weekend's developments aligned with the lowest-probability, strongest-bull scenario laid out in the original piece: a genuine, operationally enforced closure of the Strait of Hormuz. Iran's aggressive posture, the vessel attacks, the industry-wide shipping halt, and the U.S. signaling a prolonged conflict all made the case for a wait-and-see approach rather than selling into Monday's opening spike. The events put significant upward pressure on price. Continued negative developments affecting the Strait seemed probable given the circumstances.

Monday, March 2 - Further Developments

The decision to hold and not sell at the opening bell Monday morning proved well-founded as events continued to deteriorate throughout the day:

• ~11:00 AM CST — Pentagon briefing. Defense Secretary Hegseth confirmed the operation had a clear and ongoing mission, signaling a multi-week campaign. Secretary Rubio told reporters the military campaign was "set to intensify."

  
  

• ~2:00 PM CST — Maersk's suspension was now industry-wide and operational, not precautionary. The Strait was functionally shut.

  
  

• ~3:00 PM CST — IRGC senior adviser Ebrahim Jabari formally declared on Iranian state television that the Strait was closed and that any vessel attempting transit would be "set ablaze." An additional vessel, the Athe Nova, was struck by two IRGC drones.

  
  

• ~3:30 PM CST — Marine insurers formally withdrew war-risk coverage for the Persian Gulf and adjacent waters. With no insurance available, the commercial closure of the Strait was now complete regardless of military developments.

  
  

• late afternoon/evening — A major Saudi refinery was struck, opening a second front beyond the Strait itself. Qatar shut down LNG production after drone strikes on key facilities. The pipeline bypass routes analysts had been counting on as a pressure valve were now in question.

Overnight, crude futures extended their gains.

Tuesday, March 3 — The Exit

Overnight futures pointed to yet another spike on Tuesday's open, and that's what materialized. UCO opened sharply higher — and that open spike was the exit signal.

By that point, my read on the situation had shifted. Iran had absorbed devastating strikes. Given the intensity and scale of the coordinated attacks were clearly the work of an overwhelming force. Hence, the idea that Iran could sustain an active, coordinated, and effective campaign against their enemies - and this for weeks or months - seemed unlikely for a regime in that condition. The blockade was real, but its durability was in question.

At the same time, the two-day price spike had to be contextualized against the world's considerable strategic petroleum reserves and the supply overhang that dominated crude prices before the attack Saturday morning. It seemed as though the market had already priced in a severe disruption scenario, and it was difficult to identify what further shocking development could push prices materially higher beyond what had already been realized. The risks of holding seemed to have tipped the balance in favor of a sell.

The Result

Entry	$26.32 — afternoon, Friday February 27
Exit	$30.19 — morning, Tuesday March 3
Return	+14.7% over 4 trading days

The trade worked because a specific, time-limited catalyst drove a sharp repricing in a compressed window — exactly the setup the anticipated in the original thesis. The exit strategy shifted from 'exit on the first spike' to 'watch and assess' monitoring real-time developments and how the markets were reacting.